Dusseldorf The price gains of the past two trading days have evaporated again. The Dax loses 2.5 percent in morning trading and stands at 9627 points.
The course of trading on Wednesday yesterday showed the typical behavior of a bear market: negative reports lead to a quick sell-out. An extremely weak Ifo index ensured that the index slipped by 650 points within a short period of time. By definition, the Dax has been in a bear market since mid-March because it slipped more than 20 percent from its record high (13,795 points) in mid-February – that was the case at around 11,000 points.
The fact that the leading German index Dax went out of trading on Wednesday after a final spurt of 1.8 percent and 9874 points was also due to gains on the US stock exchanges. The Asian stock exchanges are already trending weaker.
The behavior showed a similar behavior as on Wednesday German stock market even before the stock exchange opened. The pre-market indicators slipped significantly after GfK market researchers published consumer sentiment for Germany. The virus crisis is depressing sentiment to the lowest level since the global financial crisis. According to GfK, consumers see Germany facing “very difficult times” economically. “Hard times will come for the trade as a whole,” concludes GfK.
And today it stands Publication of another important economic barometer on, a stepchild of the market that has not been noticed for a long time. It’s the weekly initial jobless claims. They were ignored because in the past few years there was almost full employment in the USA. According to the Commerzbank– Analysts are likely to see applications for around three million by March 21, a tenfold increase over the previous week. This is unlikely to support the stock markets.
So there is a lot to be said that this bear market in this country with all its consequences is likely to continue over a longer period of time. According to the Frankfurt Stock Exchange, the behavioral economist Joachim Goldberg expects only “rallies within the bear market” in the future, ie only interim price gains within the longer-term downward trend.
His reasoning: Both the “bears” that are betting on falling prices and the bulls that are expecting price gains have not separated from their commitments in the past few days. The profits with their purchased long and short products are apparently not enough for them. Apparently there have to be even larger price movements for one side or the other to sell.
Which naturally leads to the question: If the Dax has to drop below 8000 points, so that there are sustainable course gains again?
“Long-term capital inflows would be necessary for the Dax to get out of the worst,” says Goldberg. “And they only come when the conviction prevails that the corona pandemic has survived to some extent.”
Minus 26.23 percent, as much as they have lost the 30 DAX values in the past 20 days, as of Wednesday. The analysts at Landesbank Helaba calculated this. They best dressed Beiersdorf-Titles with a minus of 5.93 percent from the affair. The biggest loss was in the papers of MTU accept with a minus of 50.17 percent.
Look at other asset classes
Oil prices are slipping significantly again on Thursday. The North Sea variety Brent falls by minus 1.3 percent $ 27.02 barrel, the US variety WTI even by 2.3 percent to $ 23.94. The prices of both varieties have already slipped by around 60 percent this year.
Given the rapidly shrinking demand and rising production, the outlook for oil prices remains negative. Estimated global oil demand will decline more than 14 million barrels a day in the second quarter, which should result in unprecedented inventory build-up.
Look at the individual values
Evotec: The shares lose 1.1 percent. The drug developer expects further strong organic growth in 2020. However, it is not yet possible to precisely quantify the effects of the corona crisis.
Deutz: In view of the corona pandemic, the engine manufacturer is suspending its forecast for the current year and shutting down large parts of its production from April 1, initially until April 17. The stock is down three percent.
SMA: In contrast, the shares of SMA Solar rose by 8.6 percent. Despite the corona pandemic, the solar technology group is sticking to its annual forecast and expects an increase in sales and profits.
ABN Amro: Strange but true. Gambling by a single customer in the United States has caused the Dutch bank a loss of $ 200 million. This will affect the results of the first quarter, said ABN Amro With. The customer had speculated with warrants and futures, the positions are now closed. Because many investors are probably wondering about the security of the trading systems, the share falls by 4.4 percent.
Pfeiffer Vacuum: The vacuum pump manufacturer has collected its annual targets because of the corona crisis. The forecasts for 2020 for sales growth, unchanged returns and investments in the order of magnitude between 40 and 60 million euros are invalid, according to the Management Board. He did not name new goals. The stock loses 2.8 percent.
Cewe: Because of the uncertainties associated with the coronavirus pandemic, the photo company has decided not to make a forecast. At the moment, the focus is on online orders and mailing. Nevertheless, the dividend is expected to rise for the eleventh time in succession, namely to EUR 2.00 per share from EUR 1.95 previously. The investors acknowledge this with a small minus of 0.3 percent.
What the chart technique says
Despite the price gains, the chart-technical picture does not yet give the all-clear. The Dax rose to 10,137 points on yesterday’s trading day. As a result, two resistances are gaining in importance: First, the downward price gap of March 12, which spans the range between 10,138 to 10,391 points, and the low of December 2018 with 10,279 points, the starting signal for the rally until mid-February 2020.
“This is the decisive hurdle in chart technology, skipping it would put the German standard values on a fast recovery path,” say the technical analysts at Düsseldorfer Bank HSBC. Without a recapture, the coming trading days are likely to remain volatile.
Such downward price gaps arise when the daily low of the previous day is above the daily high of the subsequent trading day. The daily low of March 11 was 10,391 points, the high of the following trading day was 10,138 points. Such gaps are a quick re-evaluation of the market and therefore an important resistance according to chart technology.
On the underside, according to the HSBC, the Dax should return to crisis mode at prices below 9070 points.